Generic Price-Hike Investigations Expand to Include Turing

As we have previously reported, (click here, here, and here to read more), generic drug manufacturers have come under scrutiny from state and federal regulators for recent generic drug price hikes. These investigations have expanded to include Turing Pharmaceuticals and its former CEO, Martin Shkreli.

As has widely been reported in the media, in August 2015, Turing acquired the drug Daraprim. Daraprim is used to treat parasitic infections that often affect AIDS patients and other patients with compromised immune systems. In September 2015, Turing raised the price of Daraprim from $13.50 to $750 per tablet overnight. This price hike caused a media firestorm that ultimately led to Shkreli’s resignation. In December 2015, Shkreli was also arrested for securities and wire fraud based on his work at his first biopharmaceutical company, Retrophin.

But what, if any, have been the antitrust implications flowing from the Daraprim price hike given that a producer’s unilateral decision to raise prices, albeit significantly, would not constitute an antitrust violation? So far, Turing has been the target of at least two antitrust investigations. In October 2015, the media first reported that the New York Attorney General’s Office is investigating Turing. Rather than investigate the Daraprim price hike, the NY AG’s Office is apparently investigating whether Turing may have inappropriately restricted the distribution of Daraprim to a small number of specialty pharmacies. Media outlets have claimed that the NY AG’s Office is investigating whether Turing restricted distribution allegedly to prevent other companies from performing their own bioequivalency studies that would allow them to develop competing products and thereby allow Turing to avoid price competition.

In January 2016, Shkreli’s lawyers announced that Turing was also being investigated by the FTC for possible antitrust violations flowing from Daraprim’s price increase. Interestingly, Shkreli’s lawyers made this announcement in a letter to the U.S. House of Representatives’ Committee on Oversight and Government Reform in an attempt to explain why Shkreli’s anticipated testimony before Congress would breach his constitutional right not to incriminate himself. In fact, at the February 4, 2016 hearing, Shkreli invoked his Fifth Amendment right and refused to answer any questions posed by members of Congress.